Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.
Below we will share with you 5 top rated government bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all government bond funds, investors can click here to see the complete list of funds.
Lord Abbett Income A (LAGVX) seeks high return along with capital preservation. A minimum of 65% of its assets are invested in debt securities backed by the U.S. Government. It also invests in derivatives. The government bond mutual has returned 2.44% over the last one year period.
The fund has an expense ratio of 0.78% as compared to category average of 0.86%.
Western Asset Mortgage Backed Securities A (SGVAX) invests a lion’s share of its assets in mortgage-backed securities of government authorized institutions such as Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and Government National Mortgage Association (Ginnie Mae). Investments can be made in securities irrespective of their maturity period. The government bond mutual fund returned 1.95% over the last one year period.
S. Leech is the fund manager and has managed this fund since 2014.
Managers Intermediate Duration Government (MGIDX) invests majority of its assets in debt securities of domestic government or other agencies authorized by the government. It invests in securities having impressive credit quality to reduce risk. The government bond mutual fund returned 1.01% over the last one year period.
As of March 2014, this fund held 309 issues with 13.42% of its assets invested in Freddie Mac Gold Single Family TBA.
T. Rowe Price US Treasury Long-Term (PRULX) invests a minimum of 85% of its assets in securities of U.S. Treasury which are guaranteed by the U.S. government. It also invests in other securities which are issued or authorized by the government. The fund targets a maturity range from 15 to 20 years. The government bond mutual fund returned -7.28% over the last one year period.
The fund has an expense ratio of 0.52% as compared to category average of 0.56%.
PL Income A (PLIAX) seeks high return. It invests in a minimum of 60% of its assets in corporate debt securities of foreign institutions that are denominated in U.S. dollars. It also invests in securities of domestic government and other authorized institutions. It may also invest a maximum of 40% in junk bonds. The government bond mutual fund returned -1.90% over the last one year period.
David R. Weismiller is the fund manager and has managed this fund since 2010.
To view the Zacks Rank and past performance of all government bond mutual funds, investors can click here to see the complete list of funds.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank